GRBK 10-K & 10-Q changes, risk factors and insider trading

Although inflation has moderated slightly, it has remained persistent in the United States in recent years due, in part, to supply chain issues, elevated energy prices, labor shortages and trade policies, among other factors. Inflation can adversely affect our homebuilding operations by increasing costs of land, financing, materials, labor and construction. While we attempt to pass on cost increases to homebuyers by increasing prices, we may not be able to offset cost increases with higher selling prices in a weak housing market. In addition, significant inflation is often accompanied by higher interest rates, which have a negative impact on housing demand. In a highly inflationary environment, depending on industry and other economic conditions, we may be precluded from raising home prices enough to keep up with the rate of inflation or may have to discount prices that could reduce our profit margins. Moreover, with inflation, the costs of capital increase and the purchasing power of our cash resources could decline. The current and continued economic conditions of high inflation and high interest rates, especially increased mortgage rates, could lead to a decrease in demand for new homes. Current or future efforts by the government to stimulate the economy may increase the risk of significant inflation and its adverse impact on our business andor financial results.

The residential construction industry experiences labor and raw material shortages from time to time, including shortages in qualified tradespeople and in supplies such as insulation, drywall, cement, steel and lumber. These labor and raw material shortages can be more severe during periods of strong demand for housing or when a region in which we operate experiences a natural disaster that has a significant impact on existing residential and commercial structures. SignificantHeightened immigration guidelines and enforcement, including federal immigration provisions contained in the One Big Beautiful Bill Act (“OBBBA”), which was signed into law on July 4, 2025, could result in labor shortages, particularly with our trade partners. Additionally, significant increases in the demand for new homes result in extended lead times, supply shortages and price increases because of the heightened demand for raw materials, products and appliances. For example, we have previously, and may in the future experience price increases, shortages and extensions to our lead time for the delivery of materials such as lumber, appliances and windows. This has and may continue to result in longer construction periods, delays in home closings and margin compression if we are unable to increase our sales prices accordingly.

The cost of labor and raw materials may also be adversely affected during periods of shortage or high inflation. Shortages and price increases could cause delays in, and increase our costs of, land development and home construction, which we may not be able to offset by raising home prices due to market demand and because the price for each home is typically set prior to its delivery pursuant to the agreement of sale with the homebuyer. In addition, the federal government has at various times in recent years imposed tariffs on a variety of imports from foreign countries and may impose additional tariffs in the future. Significant tariffs or other restrictions that are placed on raw materials that we use in our homebuilding operation, such as lumber or steel, could cause the cost of home construction to increase, which we may not be able to offset by raising home prices or which could slow our absorption due to constraints on market demand. Additionally, changes in immigration laws and/or their enforcement could result in tighter overall labor conditions and a shortage of labor. As a result, shortages or increased costs of labor and raw materials could have a material adverse effect on our business, prospects, financial condition and results of operations.

Potential tariffs, if enacted into law,Tariffs could adversely affect our business and financial results, especially since we may not be able to raise home prices sufficiently to offset increased prices caused by any such tariffs.

The incoming Trump administration has proposed the implementation ofimposed a number of tariffs, including a 25% tarifftariffs on imports from Canada and otherseveral countries, including a 35% tariff on softwood lumber imports from Canada, which could, if enacted into law, likely significantly increase the cost of lumber in the U.S. As noted above with respect to the impact of inflation, while we attempt to pass along price increases to our consumers to help offset price increases we incur, we may not be able to continue to do so, thereby adversely impacting our margins as a result of any tariffs imposed on our operations. The imposed tariffs have been the subject of numerous legal challenges, including before the U.S. Supreme Court, the outcome of which has yet to be determined. Even if those challenges are successful, it is uncertain as to whether we will be able to recover any tariffs we have previously paid, or whether the U.S. government will attempt to reimpose the tariffs under some other authority.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made major changes to the Internal Revenue Code that, in part, affect the after-tax cost of owning a home. Specifically,In addition, the OBBBA, includes provisions which extend and modify the limitations of the Tax ActAct. limitedFor instance, under OBBBA, the abilityannual oflimitation homebuyerson to deduct (i) property taxes, (ii) mortgage interest, and (iii) state and local income taxes. The annualthe deduction for real estate taxes and state and local income taxes (or sales taxes in lieu of income taxes) is permanently extended and the deduction is now generally limited to $10,000.$40,000 Thesefor 2025 through 2029, subject to 1% increases from 2026 through 2029 and phasedown depending on the income of the taxpayer, and to $10,000 for 2030 and subsequent years. The OBBBA also permanently extends the Tax Act limitation that provided that, through the end of 2025, the deduction for mortgage interest is generally only available with respect to the first $750,000 of a new mortgage. If the federal government or a state government further changes increasedits income tax laws to further eliminate or substantially limit these income tax deductions, the after-tax cost of owning a new home would further increase for many of our potential homebuyers and the potential homebuyers of our homebuilding customers.

The loss or reduction of homeowner tax deductions that have historically been available has reduced and could further reduce the perceived affordability of homeownership, and therefore the demand for and sales price of new homes, including ours. In addition, increasescertain ininsurance propertycompanies taxhave ratesincreased the cost of and/or restricted, curtailed or feessuspended onthe developersissuance byof localhomeowners’ governmentalinsurance authorities,policies. asThis experiencedhas inboth responsereduced the availability of insurance and increased the cost of such insurance to reducedprospective federal and state funding or to fund local initiatives, such as funding schools or road improvements, or increases in insurance premiums can adversely affect the abilitypurchasers of potential customers to obtain financing or their desire to purchase new homes, and can have an adverse impact on our business and financial results.homes.

It is conceivable that we might integrate artificial intelligence (“AI”) solutions into our information systems in the future, potentially assuming a more critical role in our operations over time. AI programs can incur significant costs and demand substantial expertise for development, pose challenges in setup and management, and necessitate periodic updates. In addition, the AI-related legal and regulatory landscape is constantly evolving and therefore remains uncertain and may be inconsistent from jurisdiction to jurisdiction. Our obligations to comply with the evolving legal and regulatory landscape could entail significant costs or limit our ability to incorporate certain AI capabilities into our operations. Competitors or other entities may integrate AI into their information systems and business operations more swiftly or effectively than us, potentially impairing our competitive edge and negatively impacting our financial performance Data protection and privacy laws continue to evolve and become more complex in various U.S. federal and state jurisdictions. Such regulatory changes, variations in requirements across jurisdictions and ongoing discussions about a national privacy laws could present compliance challenges. The costs of complying with such changes could adversely affect our business.performance.

As a homebuilder, we are subject to construction defect and home warranty claims arising in the ordinary course of business. These claims are common in the homebuilding industry and can be costly and once claims are asserted, it can be difficult to determine the extent to which the assertion will expand in number or geographically. In addition, the costs of insuring against construction defect and product liability claims are high. This coverage may be restricted and become more costly in the future. If the limits or coverages of our current and former insurance programs prove inadequate, or we are not able to obtain adequate or reasonably priced insurance against these types of claims in the future, or the amounts currently provided for future warranty or insurance claims are inadequate, we may experience losses that could negatively impact our financial results. We rely on subcontractors to perform the actual land development activities and construction of our homes and, in some cases, select and procure building materials. We typically require our subcontractors to have general liability, workers compensation, and other business insurance. These insurance policies are intended to protect us against a portion of our risk of loss from claims, subject to certain retentions, deductibles, and available policy limits.

We self-insure some of our risks through a wholly-owned insurance subsidiary. Policies issued by our captive insurance subsidiary represent self-insurance of these risks by us. We record expenses and liabilities based on the estimated costs required to cover our self-insured liability. These estimated costs are based on an analysis of our historical claims and industry data and include an estimate of claims incurred but not yet reported. The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of products we build, insurance industry practices, and legal or regulatory actions and/or interpretations, among other factors.

In 2024, we established GRBK Mortgage, a wholly owned subsidiary, to provide mortgage related services to homebuyers. We previously provided such services through our joint venture, BHome Mortgage. The residential mortgage lending industry remains under intense scrutiny and is heavily regulated at the federal, state and local levels. Changes to existing laws or regulations or adoption of new laws or regulations could require our joint venture to incur significant compliance costs. A material failure to comply with any of these laws or regulations could result in the loss or suspension of required licenses or other approvals, the imposition of monetary penalties, and restitution awards or other relief. Any of these outcomes could have an adverse effect on our results of operations.

We are not restricted from issuing additional shares of our authorized common stock or Series A preferred stock, including securities that could be converted into or exchanged for, or that represent the right to receive, shares of our common or preferred stock. For example, in December 2021, we offered 2,000,000 depositary shares each representing a 1/1000th interest in our 5.75% cumulative perpetual preferred stock. If we issue a substantial number of shares of common or Series A preferred stock, or depositary shares representing interests in our preferred stock, or if the expectation of such issuances is broadly disseminated in the market, including in connection with any acquisitions, the market price for our common, preferred or depositary shares could be adversely affected, and our stockholders’ interest could be diluted. Our decision to issue equity securities will depend on market conditions and other factors, and we cannot predict or estimate with certainty the amount, timing or nature of potential future issuances. Accordingly, our stockholders bear the risk that such future equity issuances could reduce market price and dilute their stock holding with us. As of December 31, 2024,2025, we had 44,498,09743,205,947 shares of common stock and 2,000 shares of Series A preferred stock outstanding.

The strongresults performanceachieved on most ofin our key metrics yearcompared overto last year isare attributablelargely todriven by our superiorstrategic focus on infill and infill-adjacent locations in high-growthhigh growth markets, our land strategyapproach to self-develop raw land into finished lots that are held on our balance sheet, and our reduced cycle times,times. Our home deliveries and the strong demand fornet new homeshome in our markets. Our average active selling communitiesorders increased 18.8%,4.2% whileand 3.1%, respectively. Home closings revenue remained relatively unchanged mainly due to a 3.1% decrease in the average sales price of homes delivereddelivered, decreasedwhich 3.4%also dueresulted toin a combination of product mix and a high mortgage rate environment. We maintained a stronglower homebuilding gross margin ofpercentage. 33.8%.We remain focused on disciplined land acquisition and operational efficiency to drive long-term value, even as we navigate a more competitive pricing environment.

The $300.9$21.3 million increase in residential units revenue was driven by the 21.1%4.2% increase in the number of homes delivered partially offset by a 3.4%3.1% decrease in average sales price of new homes delivered. The increase in new homes delivered iswas attributableprimarily todriven by our increaseTrophy inSignature community count, the limited competition in our infillHomes and infill-adjacentCB communityJENI sites,Homes our reduced cycle times, and the continued low supply of existing and new home inventory in our markets.brands. The decrease in the average sales price of homes delivered is primarilywas attributable to anproduct increasemix, inhigher theincentives, percentage of home deliveries by Trophy Signature Homes over the last yeardiscounts, and higherclosing incentives driven by the high mortgage rate environment. Trophy had an average sales price below the Company average duecosts to asustain mixorder of product type and selling more inventory in perimeter locations.pace.

Backlog refers to homes under sales contracts that have not yet closed at the end of the respectiverelevant period, and absorption rate refers to the rate at which net new home orders are contracted per average active selling community during the respectiverelevant period. Sales contracts may be canceled prior to closing for a number of reasons, including the inability of the homebuyer to obtain suitable mortgage financing. Accordingly, backlog may not be indicative of our future revenue.

Backlog revenue decreased by 10.7%28.5% mainly due to a 13.2% decrease inof 148 backlog units partially offset byand a 3.0%8.2% increasedecrease in the average sales price of backlog units.units Ascompared ato result,the ourprior specyear period. The change in backlog is due to increase in homes delivered of 160 units underpartially constructionoffset asby aan percentageincrease in new home orders of total114 units under construction increased from 69.8% as of December 31, 2023 to 75.6% as of December 31, 2024.units.

Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevantrespective period, was 7.5% for the year ended December 31, 2025, compared to 7.3% for the year ended December 31, 2024, compared to 6.6% for the year ended December 31, 2023.2024. Our cancellation rate remained in a historically low range under 10.0% since December 31, 2022.

Residential units revenue increased by $300.9$21.3 million or 17.0%1.0% during the year ended December 31, 2024, mainly2025 due to anthe increase in home deliveries of 21.1%4.2% partially offset by a 3.4%3.1% reduction in average sales price of homes delivered as discussed above. Cost of residential units as a percent of residential units revenue for the year ended December 31, 20242025 decreasedincreased to 66.2%69.5% compared to 69.1%66.2% in the previous year due to a combination of producthigher mixdiscounts and aclosing focus on delivering more affordable product to combat high interest rates.costs.

Residential units gross margin for the year ended December 31, 20242025 increaseddecreased to 33.8%,30.5%, compared to 30.9%33.8% for the year ended December 31, 2023.2024. The increasedecrease in residential units gross margin is primarily duedriven toby limitedhigher competitionincentives, in our infilldiscounts, and infill-adjacentclosing community sites, our self-development strategy, our high growth primary markets of DFW and Atlanta, our infill locations, and our expertise in site selection.costs.

From time to timetime, we will opportunistically sell finished lots to other homebuilders when we determine that we have excess capacity in specific neighborhoods or submarkets.homebuilders. Lots revenue increaseddecreased by 98.3%52.5% during the year ended December 31, 2024,2025, driven by a 153.4%63.2% increasedecrease in the number of lots closed partially offset by a 21.7%29.3% decrease in the average lot price. Land revenue represents sales of two tracts of commercial land during the year ended December 31, 2024.

Selling,Total selling, general and administrative expense as a percentage of revenue wasincreased to 11.0% for the year ended December 31, 2025, which is substantially in line with 10.8% for the year ended December 31, 2024, which is substantially in line with 10.9% for the year ended December 31, 2023.2024.

Selling, general and administrative expenses as a percentage of revenue for builder operations remainedwas flat11.0% compared to 10.9% in the prior year over year.period. Builder operations expenditures include salaries, sales commissions, and community costs such as advertising and marketing expenses, rent, professional fees, and non-capitalized property taxes.

Selling, general and administrative expense for the corporate, other and unallocated non-operating segment for the year ended December 31, 20242025 was $8.1$9.2 million, compared to income of $0.3$8.1 million for the year ended December 31, 2023. The increase was driven by incentive compensation and charitable donations during the year ended December 31, 2024. Corporate, other and unallocated expenses generally include capitalized overhead adjustments that are not allocated to builder operations segments.

Equity in income of unconsolidated entities decreased to $5.1$1.0 million, or 69.6%,80.3%, for the year ended December 31, 2025, compared to $5.1 million for the year ended December 31, 2024, comparedprimarily due to $16.7the millionwinding fordown of our BHome Mortgage joint venture and ramping up of our wholly-owned subsidiary GRBK Mortgage during the year ended December 31, 2023. This decrease is mainly due to the sale of our ownership interest in Challenger during the three months ended March 31, 2024, wherein, we recognized only one month of net earnings from this investment during 2024 compared to twelve months in the prior year.2025. See Note 5 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a summary of Green Brick’s share in net earnings by unconsolidated entity.

Other income, net, increaseddecreased to $27.7 million for the year ended December 31, 2025, compared to $29.8 million for the year ended December 31, 2024, compared to $19.4 million for the year ended December 31, 2023.2024. The change was primarily due to a $10.7 million gain in the sale of our investment in Challenger.Challenger during the year ended December 31, 2024 partially offset by income generated from our wholly-owned mortgage subsidiary during the year ended December 31, 2025.

Income tax expense increased towas $94.7 million for each of the yearyears ended December 31, 2024 from $84.6 million for the year ended December 31, 2023. The increase was substantially due to higher taxable income partially offset by investment tax credits purchased at a discount2025 and an income tax benefit for equity compensation deductions.2024. See Note 13 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion on the Company’s income tax expense for the year ended December 31, 2024.2025.

Lots Owned and ControlledUnder Contract

The following table presents the lots we owned or controlled,had under contract, including lot option contracts, as of December 31, 20242025 and December 31, 2023.2024. Owned lots are those for which we hold title, and have yet to start vertical construction, while controlled lots under contract are lots past feasibility studies and approved by land committeethose for which we do not hold title, but have the contractual right to acquire title.acquire.

As of December 31, 20242025 and December 31, 2023,2024, we had $141.5$154.6 million and $179.8$141.5 million of unrestricted cash and cash equivalents,cash, respectively. Our historical cash management strategy includes redeploying net cash from the sale of home inventory to acquire and develop land and lots that represent opportunities to generate desired margins and returns, and using cash to make additional investments in business acquisitions, joint ventures, or other strategic activities.activities such as stock repurchases.

Our principal uses of capital for the year ended December 31, 20242025 were home construction, land purchases, land development, repayments of lines of credit, operating expenses, and payment of routine liabilities.liabilities and stock repurchases. Historically, we have used funds generated by operations and available borrowings to meet our short-term working capital requirements. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth.

Our homebuilding debt to total capitalization ratio, which is calculated as the sum of borrowings on lines of credit, the senior unsecured notes, and notes payable, net of debt issuance costs (“total debt”), divided by the total capitalization, which equals the sum of Green Brick Partners, Inc. stockholders’ equity and total debt, was approximately 17.2%12.8% as of December 31, 2024.2025.

In this Annual Report on Form 10-K, we utilize a financial measure of net debt to total capitalization ratio that is a non-GAAP financial measure as defined by the SEC.Securities and Exchange Commission (“SEC”). Net debt to total capitalization is calculated as total debt less cash and cash equivalents, divided by the sum of total Green Brick Partners, Inc. stockholders’ equity and total debt less cash and cash equivalents. We present this measure because we believe it is useful to management and investors in evaluating the Company’s financing structure. We also believe this measure facilitates the comparison of our financing structure with other companies in our industry. Because this measure is not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation, as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

The closest GAAP financial measure to the net debt to total capitalization ratio is the debt to total capitalization ratio. The following table represents a reconciliation of the net homebuilding debt to total capitalization ratio as of December 31, 20242025 (dollars in thousands):

•Operating activities. Net cash provided by operating activities for the year ended December 31, 20242025 was $25.9$213.2 million, compared to $213.3$25.9 million during the year ended December 31, 2023.2024. The net cash inflows for the year ended December 31, 20242025 were primarily generated from business operations of $417.2$343.5 millionmillion, partially offset by an increase in inventory of $403.3$160.3 million.

For•Investing discussionactivities. and analysis ourNet cash flowsused in investing activities for the year ended December 31, 20232025 as well as for comparisonincreased to our$43.6 million compared to cash flowsprovided by investing activities of $27.8 million for the year ended December 31, 2022,2024. referThe tocash Itemoutflows 7were primarily used for investments in unconsolidated entities of Part$38.8 IImillion and the purchase of ourproperty Annualand Reportequipment, onnet Formof 10-Kdisposals forof $4.8 million during the year ended December 31, 2023.2025.

Secured Revolving Credit Facility – As of December 31, 20242025 and 2023,2024, we had no outstanding amounts under our Secured Revolving Credit Facility. BorrowingsOn May 1, 2025, the Company entered into the Tenth Amendment to the Secured Revolving Credit Facility to extend its maturity date to May 1, 2028. Outstanding borrowings under the amended Secured Revolving Credit Facility bear interest payable monthly at a floating rate per annum equal to SOFR plus 2.25%, but in no event less than 3.15% per annum or more than the lesser of 18% and the highest maximum rate announcedallowed by Bankapplicable oflaw. America,The N.A.entire asunpaid itsprincipal “Primebalance Rate”and lessany 0.25%,accrued subjectbut tounpaid ainterest minimumis rate.due Asand amended, this credit agreement maturespayable on Maythe 1,maturity 2025 and carries a minimum interest rate of 3.15%.date.

Unsecured Revolving Credit Facility – As of December 31, 2024,2025, we had $25no millionamounts outstanding under our Unsecured Revolving Credit facility compared noto amounts$25 outstandingmillion as of December 31, 2023.2024. On December 13,10, 2024,2025, the Company entered into the TwelfthThirteenth Amendment (the “Twelfth Amendment”) to this credit agreementagreement. whichThe adoptedCredit Agreement was amended (i) to reduce the SOFR spread and base rate spread, (ii) to allow the Company to request a leverage-basedrevolving pricingcredit gridadvance forusing aDaily reductionSOFR (as defined in boththe interestCredit rateAgreement) and non-use(iii) fee andfor other administrative changes. The Twelfth Amendment removed one lender with a $25 million prior commitment and added $30 million in new commitments, thereby increasing total commitments toremain at $330 million. The maturity of all commitments under the facility werehave been extended to December 14, 2027.2028.

•In August 2019, we issued $75.0 million of senior unsecured notes (the “2026 Notes”) of which $62.5 million was outstanding as of December 31, 2024.. Interest accrues at an annual rate of 4.0% and is payable quarterly. PrincipalThe on the 2026 Notes of $12.5 million is due on August 8, 2025 and the remainingfinal principal amountpayment of $50.0 million is due on August 8, 2026.

•In February 2021, we issued $125.0 million of senior unsecured notes (the “2028 Notes”) of which $100.0 million was outstanding as of December 31, 2024.. Interest accrues at an annual rate of 3.25% and is payable quarterly. PrincipalThe remaining principal on the 2028 Notes is due in increments of $25.0 million annually on February 25 in each of 2025, 2026, 2027, and 2028.

OptionalThe senior unsecured notes allow optional prepayment is allowed with payment of a “make-whole” premium that fluctuates depending on market interest rates. Interest is payable quarterly in arrears.

As of December 31, 2024,2025, we believe that our cash on hand, capacity available under our lines of credit,credit and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months and fund our operations. For more detailed information on our lines of credit, refer to Note 8 to the Consolidated Financial Statements located in Part II, Item 8 of this Annual Report on Form 10-K.

As of December 31, 20242025 and December 31, 20232024 we had 2,000,000 Depositary Shares issued and outstanding, each representing 1/1000 of a share of our 5.75% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”). We pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by the Board, at the rate of 5.75% of the $25,000 liquidation preference per share. Dividends are payable quarterly in arrears. During each of the years ended December 31, 20242025, 2024, and 2023, we paid dividends of $2.9 million on the Series A Preferred Stock. During the year ended December 31, 2022, we paid dividends of $2.8 million. On February 17,18, 2025,2026, the Board declared a quarterly cash dividend of $0.359 per depositary share on the Series A Preferred Stock. The dividend is payable on March 15,13, 20252026 to stockholders of record as of March 1,2, 2025.2026.

To a much lesser extent due to limited availability in our market of true lot developers, weWe also utilize option contracts with lot sellers as a method of acquiring lots in staged takedowns, which are the schedules that dictate when lots must be purchased to help manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. Lot option contracts generally require us to pay a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices that typically include escalations in lot prices over time.

Our utilization of lot option contracts is dependent on, among other things, the availability of lotland developerssellers willing to enter into these arrangements, the availability of capital to finance the development of optioned lots, general housing market conditions,conditions and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.

As of December 31, 2024,2025, we had earnest money deposits of $9.7$14.8 million at risk associated with contracts to purchase 2,9759,633 lots past feasibility studies with an aggregate purchase price of approximately $160.3$377.6 million.

The following discussion of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K/A for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on FebruaryMay 25,11, 2026 and our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Our key financial and operating metrics are home deliveries, home closings revenue, average sales price of homes delivered, and net new home orders, which refers to sales contracts executed reduced by the number of sales contracts canceled during the relevant period, and homebuilding gross margin.margin, and incentives on homes closed as a percentage of residential units revenue. Our results for each key financial and operating metric, as compared to the same period in 2025, are provided below:

Our home deliveries were substantially in line in the firstsecond quarter of 2026 year over year, while average sales prices decreased primarily as a result of elevated discounts and incentives. Homebuilding gross margins decreased from 32.1%31.3% to 28.9%29.8% for the three months ended MarchJune 31,30, 2026, primarily due to higher incentives and discounts.product mix.

Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

The table below represents residential units revenue and new homes delivered for the three months ended MarchJune 31,30, 2026 and 2025 (dollars in thousands):

The $33.7 million or 7.0% decrease in residentialResidential units revenue wasdecreased primarily driven by higher discounts11.4% and closingnew costhomes incentivesdelivered offeredwere tosubstantially buyersin who originated their loansline with ourthe whollyprior ownedyear mortgage subsidiary.period. The 6.9%11.9% decrease in the average sales price of homes delivered during the three months ended MarchJune 31,30, 20262026, is consistentdue withto theincreased decreaseincentives inand homeproduct closings revenue.mix.

For the three months ended MarchJune 31,30, 2026, residential units revenue decreased $33.7$60.5 million or 7.0%11.4% while cost of residential units decreased by $8.8$34.7 million, or 2.7%,9.5%, compared to the same period in the previous year. Residential units gross margin declined by 310150 bps to 29.0%29.8% for the three months ended MarchJune 31,30, 2026, from 32.1%31.3% for the three months ended MarchJune 31,30, 2025. The decrease in residential units gross margin is attributable to higher incentives and discounts.

Selling, general and administrative expenses as a percentage of revenue increased by 0.6% for the three months ended MarchJune 31,30, 2026.2026, mainly due to lower revenue, partially offset by increased salaries and share-based compensation.

Selling, general and administrative expenses as a percentage of revenue for builder operations increased from0.4% 10.9% in the three months ended March 31, 2025 to 11.8% in the three months ended March 31, 2026mainly due to anthe increasedecline in commissionresidential andunits salary expenses as a percentage of revenue.revenues. Builder operation expenditures include salary expenses, commissions, corporate allocations, and community costs such as advertising and marketing expense,expenses, rent, professional fees, and non-capitalized property taxes.

Selling, general and administrative expenses for the corporate, other and unallocated non-operating segment increasedfor approximatelythe $2.2three months ended June 30, 2026 were $2.1 million, compared to $0.5 million for the three months ended June 30, 2025. The increase was due to higher incentiveshare-based compensation expenses during the three months ended MarchJune 31,30, 2026. Corporate, other and unallocated expenses generally include capitalized overhead adjustments that are not allocated to builder operations segments.

Operating as a captive business model primarily targeted to support our Builder operations, the business levels of our Financial Services operations are highly correlated to homebuilding, as the customers to our homes continue to account for substantially all of its business. We believe that our mortgage capture rate, which represents loan originations from our Builder operations as a percentage of total loan opportunities from our Builder operations, excluding cash closings, is an important metric in evaluating the effectiveness of our captive financial services business model. The following tables present selected financial information for our Financial Services operations (in thousands):

Equity in income of unconsolidated entities increased to $1.1$0.6 million, or 19.6%, for the three months ended MarchJune 31,30, 2026, compared to $0.5 million for the three months ended MarchJune 31,30, 2025. See Note 3 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of Green Brick’s share in net earnings by unconsolidated entity.

Other (Loss) Income, Net

Other income (loss) income,, net, was a $0.3$2.3 million net loss for the three months ended MarchJune 31,30, 2026, compared to $0.6$(1.2) million net other income for the three months ended MarchJune 31,30, 2025. The change was driven by a decrease in pursuit costs during the three months ended June 30, 2026.

Income tax expense was $18.4$20.7 million for the three months ended MarchJune 31,30, 2026 compared to $22.2$23.0 million for the three months ended MarchJune 31,30, 2025. The decrease wasin substantiallyincome tax expense is mainly due to a lower taxable income.income for the three months ended June 30, 2026. See Note 12 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a discussion on the Company’s income tax expense for the three months ended June 30, 2026.

The following table presents the lots we owned or controlled, including lot option contracts, as of MarchJune 31,30, 2026 and December 31, 2025. Owned lots are those for which we hold title,title. and have yet to start vertical construction, while lotsLots under contract are those for which we do not hold title, but have the contractual right to acquire.acquire title but do not currently own.

(4) As of MarchJune 31,30, 2026 and December 31, 2025, 22.9%53.3% and 16.6% of the total lots under contract had refundable deposits.

As of MarchJune 31,30, 2026 and December 31, 2025, we had $144.9$131.6 million and $154.6 million of unrestricted cash and cash equivalents, respectively. In addition, as of June 30, 2026, we had $330.0 million of available capacity under our Unsecured Revolving Credit Facility, with no amounts outstanding. Combined with unrestricted cash and cash equivalents of $131.6 million, our total available liquidity was approximately $461.6 million. Our historical cash management strategy includes redeploying net cash from the sale of home inventory to acquire and develop land and lots that represent opportunities to generate desired margins and returns, and using cash to make additional investments in business acquisitions, joint ventures, share repurchases or other strategic activities such as stock repurchases.activities.

Our principal uses of capital for the threesix months ended MarchJune 31,30, 2026 were home construction, land purchases, land development, repayments of lines of credit and senior notes,debt, operating expenses, share repurchases, and payment of routine liabilities and stock repurchases.liabilities. Historically, we have used funds generated by operations and available borrowings to meet our short-term working capital requirements. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth.